Altona Energy Regulatory News (ANR)

31 October 2013

Altona Energy Plc

("Altona" or "the Group")

Final Results for the Year to 30 June 2013

Altona (AIM: ANR) today announces final results for the year to 30 June 2013.

Highlights:

· Report published establishing economic benefits of joint CTL/CTM complex at Arckaringa

· South Australian Govt granted two year extension (the maximum possible) to licences at Arckaringa

· MOU signed with Duwa to seek to secure an operating coal mine based on an existing Mining Licence with further progress made in due diligence from both sides

For further information, please visit www.altonaenergy.com or contact:

About Altona Energy

Altona Energy is listed on the London Stock Exchange's AIM market. Its current focus is firmly on the evaluation and development of the Company's 49% interest in its flagship coal-to-liquids Arckaringa Project to exploit the huge coal resources contained in three exploration licences covering 2,500 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia. The Project is designed to include a modern, combined-cycle power station adding 560Mw to the national grid and to produce clean burning fuel for Australia and the world from a resource equivalent to 7.8 billion barrels. Altona Energy has forged a Joint Venture with CNOOC New Energy Investment Co., Ltd., a subsidiary of the China National Offshore Oil Corporation (CNOOC), to complete the Project Bankable Feasibility Study and expedite the Project's development.

CHAIRMAN'S STATEMENT

The year ended 30 June 2013 has been a frustrating period for everyone connected with Altona as we looked to progress our Arckaringa coal-to-liquids ("CTL") project ("Arckaringa" or the "Arckaringa Project" in South Australia, whilst concurrently leveraging our Chinese connections to potentially enter that market directly.

There are significant elements of our projects in Australia and China that are beyond our immediate control. Decisions vital to the progress of our projects, from central and regional government, as well as from our 51% Arckaringa partners CNOOC New Energy Investment Co., Ltd., a subsidiary of China National Offshore Oil Corporation ("CNOOC"), have been delayed or postponed.

The recently completed coal-to-methanol ("CTM") study gives further validation that the Arckaringa project has world class potential therefore despite these delays, our management team has been proactive in looking for solutions to these delays and postponements which have been so frustrating for all of us. At Arckaringa, we have suffered from further delays as we wait for our partners CNOOC to go through a series of internal processes as they look to select the drilling services provider in advance of the drilling programme.

We have worked diligently with CNOOC to progress the work programme. However, we continue to be frustrated by the, often unexplained, delays. Despite control of the project delivery being vested with CNOOC, as operator, the board has recognised that the CNOOC approach has created significant uncertainty and the lack of transparency is not sustainable. Therefore, we have been holding discussions with CNOOC and all stakeholders in the project, with a view to agreeing a development path that is transparent and achievable.

Importantly, the recent investment committed by Wintask Group Limited gives the Company the financial stability to pursue all available avenues to find a solution acceptable to all our stakeholders and as soon as is practicable, we will update shareholders with details of the progress of these negotiations.

Financial Results

The financial loss of the Group for the year ended 30 June 2013 of £1,398,000 (2012: £1,861,000) was in line with expectations and included the benefit during the period of a £51,000 tax credit (2012: £50,000) in respect of research and development costs available to the Group. On 28 January 2013, we announced the placing of 90,300,000 new Ordinary Shares at a price of 1.5 pence to raise a total of £1,354,500 to provide additional working capital.

As at 30 June 2013, the Group had cash of £679,000 (2012 - £1,252,000). Subsequent to the year end the Group entered into an agreement to issue up to 230,000,000 shares at a price of 1.4 pence per share in two separate tranches, the first for 59.7million shares on or before 31 October 2013 with the remaining share issue to be issued, subject to shareholder approval, on or before 31 December 2013.

Arckaringa

CTL at Arckaringa alone could sustain fuel production of some 30,000 Barrels per Day (BPD) for 70 years or, which is equivalent to the total amount of fuel imported by Australia in 2011. This year we have looked at ways to make this project even more compelling.

To that end, Peter Fagiano explored the strategy of a co-development of CTL and CTM at Arckaringa. Products from a CTL/CTM complex lend themselves to being substantial blend components for conventional refinery based diesel and gasoline. The high specification diesel produced can be used as a blend, with refinery diesel to improve performance and reduce contaminants, or be upgraded to jet fuel standards for the aviation industry

At Arckaringa, the original studies focussed on developing 2x15,000 BPD trains for CTL development at Arckaringa. However, a combination of a single 15,000 BPD CTL Plant, in conjunction with a single 6,200 Tonnes per Day ("TPD") CTM Plant represents a better economic solution, with an 18% increase in gross revenue. We have communicated the findings of this report across the Industry and have been extremely encouraged by the positive reception that the CTL/CTM complex has received and continues to receive.

In terms of progress at Arckaringa, despite our best efforts, it has not been possible to progress developments at the project anything like as quickly as we would have liked.

There have been some positive developments: the South Australian Government, through the Minister for Mineral Resources and Energy, granted a two year extension over all of the areas covered by EL 4511, EL 4512 and EL 4513, following a successful renewal application submitted in May 2013 by the Arckaringa JV partners, CNOOC (51% holder in each of the EL's) and Altona's subsidiary Arckaringa Energy (49%).

As part of the licence renewal the joint venture was required to submit a report on project expenditures to the South Australian government. For the Arckaringa Exploration licences ("EL's") the minimum spend requirement for the year to 6 June 2013 was A$690,000 and the joint venture reported total expenditure of over A$900,000 for the period. However despite CNOOC being responsible for the BFS spend, over 50% of the expenditure for this period had been incurred by Altona, therefore it was only by Altona's continued dedication to the project that the minimum spend was achieved, a key requirement in the renewal process.

The two year extension and full area coverage is the most that the Government could have granted under the maximum 5 year term for Mineral EL's. We began the tender and selection of a company for the role of Drilling Services Provider to manage a test drilling program and associated technical analysis work at Arckaringa, an important step in the Bankable Feasibility Study for the project. CNOOC has received bid documents from three of the five pre-qualified companies to manage the test drilling program.

China

We embarked upon Project Dragon, with the full support of our two largest shareholders at that time, Invesco and Tongjiang. The strategy of Project Dragon was to secure working capital from an operating coal mine to fund our share of the Arckaringa project.

Unfortunately the vendor was unable to progress the Mining Licence ("ML") application process beyond local authority level and, therefore, failed to obtain the conversion of Exploration Licence ("EL") 1 by the 30 June 2013 deadline. The initial approval at local authority level was encouraging but, unfortunately, the application did not receive the requisite regional approval.

A great deal of work went on, through Altona's Beijing office, on developing contingency plans to mitigate against the possibility of the regional government not approving the EL conversion by the 30 June deadline.

The Memorandum of Understanding with Xinjiang Hetian Duwa Industry Limited ("Duwa") represents the most advanced of these opportunities and the investment at Duwa would be into an operating coal mine based on an existing ML, rather than relying on the conversion of ELs in the current regulatory environment. Unlike the Project Dragon EL1 conversion target, the Duwa mine is well established and it produces coal 24/7, all year round.

Initial Technical and Legal due diligence has been completed by Altona's lawyers in China, this process has identified that additional legal due diligence on the ownership status of the licences is required to investigate the discrepancies that the process identified. Both parties have agreed to try and rectify the situation as soon as possible.

Outlook

Our Arckaringa project remains a world class resource and management are continuing to work hard to build a company with our partners to give us a much greater opportunity to progress it. To this end we are pleased to welcome Wintask Group Limited as a cornerstone investor in the Company.

With all this in mind I would like to thank all those involved with the Company for their hard work as well as you, our loyal shareholders for your patience and ongoing support. I look forward to updating you all on our progress.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2013

STATEMENTS OF FINANCIAL POSITION

As at 30 June 2013

STATEMENTS OF CASH FLOWS

For the year ended 30 June 2013

STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 June 2013

The following described the nature and purpose of each reserve within owners' equity:

1. ACCOUNTING POLICIES

BASIS OF PREPARATION

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. Both the parent company financial statements and the Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards IFRSs and IFRIC interpretations, issued by the International Accounting Standards Board (IASB) as endorsed for use in the EU ('IFRSs') and those parts of the Companies Act 2006 that are applicable to companies that prepare their financial statements under IFRS.

The financial information for the years ended 30 June 2013 and 30 June 2012 does not constitute statutory accounts as defined by section 435 of the Companies Act 2006 but is extracted from the audited accounts for those years. The 30 June 2012 accounts have been delivered to the Registrar of Companies. The 30 June 2013 accounts will be delivered to Companies House within the statutory filing deadline. The auditor's report on those financial statements was unqualified but did include a reference to the uncertainties surrounding going concern, to which the auditors drew attention by way of emphasis and did not contain a statement under s498 (2) - (3) of Companies Act 2006.

2. REVENUE AND SEGMENTAL INFORMATION

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision‑maker. The chief operating decision‑maker, who is responsible for allocating resources and assessing performance of the operating segment and that make strategic decisions, has been identified as the Board of Directors.

The Group had no revenue during the period.

During the year ended 30 June 2013 the Group operated in one segment being the evaluation of the Arckaringa coal and CTL project in South Australia. The Parent Company serves as an administrative head office and is based in the United Kingdom. During the year ended 30 June 2013 the Group's operations spanned three countries, Australia, China and the United Kingdom. Included within the results of the administrative and corporate operations are the results of the Chinese branch. The activity of the Chinese branch does not breach the 10% level required to be separately analysed.

Segment result

The prior year share based payment charge is included within the UK segment result.

Segment assets and liabilities

Other segment information

3. LOSS PER SHARE

The loss for the period attributed to shareholders is £1,398,000 (2012: Loss of £1,861,000).

This is divided by the weighted average number of Ordinary shares outstanding calculated to be 507.1 million (2012: 445.2 million) to give a basic loss per share of 0.28 pence (2012: basic loss per share of 0.42 pence).

As inclusion of the potential ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive and, as such, the effect of the dilution has not been applied in the calculation. The potential future share issues that may dilute the loss per share relate to options in issue and deferred shares disclosed at note 17 in the financial statements.

4. INTANGIBLE ASSETS

Exploration and evaluation relates to the development of an integrated CTL plant and co-generation power facility, supported by an open-cut coal mine at the Group's Arckaringa Project in South Australia. 

5. RELATED PARTY TRANSACTIONS

The Key Management personnel are considered to be the Directors. Details of their remuneration are included in Note 6 to the financial statements.

The share based payments calculation is disclosed at note 17 in the financial statements, and the financial impact is included in the numbers disclosed at Note 6 in the financial statements. The cash element above is disclosed at Note 15 in the financial statement.

During the period, the Company paid £225,000 (2012: £225,000) to CJL Consultants Limited, a company related to Christopher Lambert, for Director Fees. These fees are included in the numbers disclosed at Note 6 in the financial statements, no amounts were payable at the end of the year (2012: £Nil)

During the period, the Group paid £30,000 (2012: £30,000) in respect of Directors fees to Sutherland People Pty limited, a company related to the Group by Phil Sutherland, a common Director, and a further amount of £Nil (2012: £19,243) in respect of consulting services provided to the subsidiary company Arckaringa Energy Pty Limited. At 30 June 2013, there was £Nil owing/owed (2012: £Nil).

6. POST REPORTING DATE EVENTS

The Group entered into an agreement to issue up to 230.0 million shares at a price of 1.4 pence per share in two separate tranches, the first for 59.7 million shares on or before 31 October 2013 with the remaining share issue to be issued, subject to shareholders approving the issue of additional shares, on or before 31 December 2013.

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